Sizing Up a Charity

It doesn’t matter whether you’re giving $100 or $10,000—you want to know that your donation will be used wisely.

First, confirm that the group has IRS 501(c)(3) status, meaning that it is a nonprofit. You can check on guidestar.org, a site that posts information on 1.7 million nonprofits, or by searching IRS Publication 78 on irs.gov.

To dig deeper, check the Web sites of such watchdogs as Charity Navigator (charitynavigator.org) and the Better Business Bureau (bbb.org). They rate nonprofits’ financial efficiency—how much is spent on fundraising and administrative costs versus real programs. Take a hard look at groups that use telemarketers or do lots of direct mail; a good chunk of donations may go toward those calls and mailings.

The watchdogs review only a fraction of all charities. If they haven’t rated a group you’re considering, you can contact the Community Foundation of the National Capital Region (cfncr.org; 202-955-5890) for advice. Or do some legwork: Ask the organization for its most recent IRS Form 990, or look at the form on guidestar.org. (Many religious charities do not have to file this form.) You can also ask for an audited financial statement.

Look at where the money goes. Most of the organizations reviewed by Charity Navigator spend at least 75 percent of their budgets on programs and services, less than 10 percent on fundraising, and less than 15 percent on administration. These totals are easy to find on Form 990. If something seems out of line, ask questions; sometimes there are good reasons groups don’t fit the formulas.

Most important, ask the charity what it has accomplished. For example, instead of considering only how many children an afterschool program serves, ask for evidence that the program makes a difference in kids’ lives. Do their grades go up? Are they more likely to stay out of trouble and finish high school?

“You want to look at the impact the program is having,” says Sally Rudney of the Montgomery County Community Foundation. “Always ask the question ‘So what?’ ”